Larry Summers says tax system can’t last

Add Larry Summers to the list of those who think the U.S. tax system needs a makeover, and fast.

“It’s not viable to continue for five more years with the tax system we now have,” the Clinton-era Treasury secretary and former director of the Obama White House’s National Economic Council said on CNBC Friday morning.

Summers was weighing in on corporate taxes and the Obama administration’s efforts to combat so-called “inversions” – deals in which U.S. companies move their legal address abroad in a bid to lower their tax bilsl. The Treasury Department announced those steps earlier this week.

Like many Democrats, Summers praised the moves, saying they were “constructive.” But they weren’t enough by themselves. Watch Summers here:

His fresh call for a rewrite of the U.S. tax code joins other such high-profile pleas, like from his former boss Bill Clinton. On Tuesday, Clinton said the U.S. corporate tax system needed reform. Republicans are urging tax reform, also, but panned the Treasury’s steps on inversions.

Meanwhile, at least one analyst says the trend of corporate inversions raises the probability of corporate tax reform in at least two ways. From a note by Alec Phillips of Goldman Sachs:

Important obstacles to corporate tax reform remain, but the inversion trend raises the probability of reform in at least two ways: first, many lawmakers are convinced that personal and corporate tax reform must be enacted together, but pressure to address inversions could increase their willingness to enact corporate-only reform. Second, the biggest partisan difference on corporate tax reform relates to whether or how much to tax foreign earnings. Against a scenario in which companies are able to avoid US tax on much of their foreign earnings through inversions, a middle ground might be easier to reach.